1
Q3 2015 PRESENTATION5 NOVEMBER 2015
2
HIGHLIGHTSTHOMAS ELDERED, CEO
HIGHLIGHTS Q3
• Another quarter with solid progress+55% Net Sales growth (+53% LC)+68% EBITDA growth
• D&T strong development (in spite of less Thyrosafe)
• Sterile Liquids continued good demand and performance
• Solids and Others below expectations
• Continued strong operating cash flow
• Acquisitions important growth driver
• Partnerships and strategic investments
• Cost and efficiency program initiated in Sweden
• New SEK 1.5 Bn bank loan secured
3
FINANCIAL HIGHLIGHTS Q3 2015
4
Sales SEK 785 m+55%
Acquisitions contributed SEK 280 m (+55%)
1% other growth (fix FX & excl Thyrosafe)
EBITDA SEK 86 m +68%
Acquisitions contributed SEK 59 m
EPS SEK -0.01 (0.22)
Q3 normally weak(holiday shutdowns)
NET SALES PER STRATEGIC BUSINESS SEGMENT
5
MS-SL +68%
MS-SO +24%
D&T +165%
508m
785m
GROWTH INITIATIVES ON TRACK
6
Growth in existing manufacturing footprint and capacity
High growth instrategic importantD&T
Portfolio outsourcing with asset acquisitions
Acquisition of CDMOs
Growth initiatives Track record 2015 YTD
Strengthened sales organisation
2013-14 ~ 3% annual growth (constant FX)
+6 since 20072014: Corvette (IT)
Lusomedicamenta (PT)
Capacity expansion in manufacturing
Strong demand for freeze drying 100% utilization
Invest EUR 32m (decided 2013)
12% share of total sales 2014 originate from D&T projects.16% of Group sales Development of IP portfolio
+3 since 2007
2014: Pessac (FR)
Flat organic growth
Sequential growth in acquired businesses
168% increase vs. 2014(9% excl acquisitions)
23% of Group sales
[Kayserberg (Alcon, FR)]
Projects under review
OT Chemistry (SE) [Nitin Lifesciences Ltd (IN)]
Projects under review
Wasserburg expansion on trackSEK 145 M in capex
DELIVERING ON OUR ACQUISITION STRATEGY
7
MARKET
RELATIONSHIP
TECHNOLOGY
TECHNOLOGY Freeze dried ampoules Injectable hormones Effervescent tablets Ophthalmics Niche APIs Pre-clinical chemistry Coated pellets Blow-fill-seal Cytotoxics
Pre-filled syringesNiche dosage forms
MARKETEurope IsraelNorth AmericaIndia
RELATIONSHIP~ 65 new customers gained through acquisitions
Note: Empty boxes reflect gaps in current portfolio which can be the focus of M&A7
Nitin
Kaysersberg
LONG-TERM OUTSOURCING CONTRACT WITH ALCON
8
Sources: Company filings.
Benefits of the arrangement
• Agreement in principle with Alcon, a Novartis company
• Long-term outsourcing of a range of ophthalmology products
• Concurrent acquisition of a manufacturing facility in Kaysersberg, France
• Approximately 260 employees will be offered continued employment with Recipharm
• Negotiations on-going. If successful, completion within the next few months
Arrangement Overview
Long-term relation with important customer Alcon/Novartis
Blow-fill-seal adds to sterile technology offering
Potential synergies with Recipharm’s other French companies
Attractive financial impact, accretive to margins, growth and EPS
• Expected annual sales approximately SEK 350m
• Expected EBITDA-margin well in line with group average
• Expected consideration for manufacturing asset less than SEK 200m
Key Financials / Terms
ACQUISITION OF NITIN LIFESCIENCES
9
Sources: Company filings.
Strategic Rationale of the Acquisition
• Rapidly growing Indian CMO specialized in injectables manufacturing
• Offers liquid ampoules, liquid vials, sterile dry powder (beta lactam& non beta lactam), multidose-eye/ear drops and lyophilized vials
• Sales predominantly in India, with growing export share to currently 11 countries
• Approximately 500 employees
• Established in 1994
Nitin Lifesciences - Business Overview
RecipharmStandalone
Recipharm + Nitin
Significant presence in expanding Indian market and platform for further growth in emerging markets
Strengthens position in Steriles with a broad small volume parenteral portfolio
Acquisition of a high quality customer base in India and globally
Attractive financial impact as acquisition is accretive to margins, growth and EPS
• Acquisition of 74% with option to acquire remaining 26%
• Purchase price: INR 6,712m (SEK 872m)
• Valuation: 12.4x EV/ LTM EBITDA
• LTM Sep Sales SEK 403m, EBITDA margin >20%
• Raising Recipharm’s EBITDA margin on PF basis
Key Financials / Terms (Exp. Close in Q1 2016)Recipharm’s Emerging Markets Footprint
ATTRACTIVE FINANCIAL IMPACT
101) LTM October 2014-September 20152) Non-audited estimated full year3) Non-audited local Indian GAAP October 2014- September 2015
Proforma net sales Proforma EBITDA
+22%
SEKmSEKm
RPH = RecipharmKBG = Kaysersberg, outsourcing from Alcon
+27%
Kaysersberg, Alcon outsourcing: negotiations on-goingNitin conditional upon Indian FIPB approval
59%26%
15%
2014
MS-SL
D&T MS-SO
INCREASING SHARE OF THE STRATEGIC BUSINESS SEGMENTS
11
NotesD&T Development & TechnologyMS-SO Manufacturing Services Solids and OtherMS-SL Manufacturing Services Sterile Liquids
Pro-forma for Nitin Acquisition(2)
46%
35%
19%
PF LTM Q3 2015MS-SO
MS-SL
D&T
51%
28%
21%
LTM Q3 2015MS-SO
MS-SL
D&T
(1) Financial figures per segment contain intergroup transactions. (2) Recognizes SEK 403m Nitin LTM Sep 2015 Sales (unaudited Indian GAAP figures), fully apportioned to the MS-SL segment.
(1) (1) (1)
12
FINANCIALSBJÖRN WESTBERG, CFO
(CURRENCY SEK MILLION)
P&L DEVELOPMENT
in relation to sales
13
Q3 YTD
0%5%
10%15%20%25%30%35%40%
MTRL EXT HC D&A OTH
2015
2014
2015 2014Net Sales 784,8 507,6
EBITDA 86,1 51,111,0% 10,1%
D&A -58,7 -25,8
EBIT 27,3 25,3
Financial items -21,7 -8,4
Profit before tax 5,6 16,9
Tax -6,0 -8,6
Net profit -0,4 8,3
55% SALES GROWTH IN Q3
14
-20%
-10%
0%
10%
20%
30%
40%
50%
60%
Q312 Q412 Q113 Q213 Q313 Q413 Q114 Q214 Q314 Q414 Q115 Q215 Q315
15
MANUFACTURING SERVICES – STERILE LIQUIDS
Sales Q3
2014 148Aquisitions +96FX effect +3Others +12015 249
EBITDA Q3
2014 20Acquisitions +24FX effect 0Others -12015 43
Sales increased by 68 % in Q3 vs LY+ Acquisitions generated 65%
EBITDA increased by 116% in Q3+ Acquisitions generated 119%
Sales YTD
2014 473Aquisitions +253FX effect +17Others -22015 741
EBITDA YTD2014 94Acquisitions +61FX effect +4Retroactive price increase Q1-14 -6Others +192015 172
Sales increase YTD of 56%
EBITDA margin YTD of 23.2% (19.8)
16
MANUFACTURING SERVICES – SOLIDS AND OTHERS
Sales Q32014 314Acquisitions +76FX effect +7Distribution services -7Large product - competition in FR -13Others +132015 390
Sales increased by 24% in Q3 vs LY+ Acquisitions added 24%- Discontinued distribution services- Competition in France of a large customer product- Almost none production of Thyrosafe
EBITDA decreased by SEK 19m in Q3 vs LY+ Acquisitions added 23% - Sales and product mix effect
EBITDA Q3
2014 19Acquisitions +4Others -232015 0 16
Sales YTD2014 1 090Aquisitions +250FX effect +25Distribution services -16Large product – competition in FR -41Others +102015 1 319
EBITDA YTD2014 137Acquisitions +35Inventory effect Q1 2014 -12One-off internal services 2014 -22Others -372015 78
17
DEVELOPMENT & TECHNOLOGYSales increased by 165% in Q3 vs LY+ Acquisitions added 177%- Reduced sales of tender product+ Increased sales of other products
EBITDA increased by 145% in Q3 vs LY+ Acquisitions added 158%- Less tender product (Thyrosafe) sales+ Positive product mix of other productsSales Q32014 66Acquisitions +117FX effect 0Tender product -15Others + 72015 175
EBITDA Q3
2014 20Acquisitions +31Others -22015 49
17
Sales YTD2014 217Aquisitions +360FX effect +2Tender product -24Others +292015 584
EBITDA YTD
2014 64Acquisitions +96Others +172015 177
Sales increase YTD of 169%
EBITDA margin YTD of 30.2% (29.6)
0
200
400
600
800
55% INCREASE IN NET SALES
18
-2.9%1.6%
55.1%
1/
1/ Currency translation effect
508
785
3.4%
-2.5%
785
2/
2/ Solids and Others product facing generic competition in France
508
785
Q3Q1 Q2 Q3
2014 577.9 611.0 507.6Acquisitions 272.3 276.6 279.6Thyrosafe, change 30.4 -39.5 -14.9FX effect 20.0 12.9 8.2Others -27.4 7.5 4.32015 873.2 868.5 784.8
vs 2014 Q1 Q2 Q3Acquisitions 47.1% 45.3% 55.1%Thyrosafe 5.3% -6.5% -2.9%FX effect 3.5% 2.1% 1.6%Others -4.7% 1.2% 0.8%
2015 PERFORMANCEKPIs 2015-YTD 2014-YTD 2014-FYNet sales (12M) 3 399 2 269 2 569
EBITDA (12M) 547 332 390
EBITDA margin (12M%) 16.1 14.6 15.5
Earnings per share (SEK) 4.17 3.37 4.63
Return on Equity (%) 10.9 10.8 11.4
ROOC (%) 12.7 20.2 12.4
Equity to assets (%) 50.2 62.1 39.41
Net WC to sales (%) 20.7 19.9 27.3
Net debt 1 089 -405 1 164
Equity 2 768 1 604 2 131
Net debt to Equity 0.4 -0.3 0.5
Net debt to EBITDA 2.0 -1.2 2.9
Cash 494 983 405
191) Net working capital is calculated as Inventory + AR + Prepaid exp&Accr Inc - AP-Accr exp&Prepaid Inc
20
CONCLUDING REMARKSTHOMAS ELDERED, CEO
ON A MISSION TO BECOME A WORLD LEADING CDMO
21
ItalyLAINATE (Milan)● Lyophilised
sterile beta lactam antibiotics
MASATE (Milan)● Lyophilisates● Liquid fills
PADERNO DUGNANO (Milan)● API development
● Finished dose form development and manufacturing
PortugalQUELUZ (Lisbon)● Solids● Liquids● Semi-solids
ODIVELAS (Lisbon)● Solids● Liquids● Semi-solids● Steriles
IndiaKARNAL (2)PAONTA SAHIB● Lyophilisates● Steriles
SwedenJORDBRO, HQ
HÖGANÄS
● Solids (granulates & powders)
KARLSKOGA● Semi-solids
SOLNA● Development
Services
STOCKHOLM● Solids
STRÄNGNÄS● Beta-lactams
(solid forms and dry syrups)
UPPSALA● Discovery and
development services
UKASHTON● Solids● Semi-solids● Inhalors
GermanyWASSERBURG● Lyophilisates● Steriles
FranceFONTAINE● Opthalmics
[KAYSERSBERG]● Solids
MONTS● Steriles
PESSAC● Development
Services● Advanced
Delivery Technologies
SpainPARETS● Solids● Semi-solids● Liquids
BUILDING A GLOBAL CDMO
22
Build a broad network with critical mass across Europe
IPO – Access to capital markets to enhance
M&A fire-power
Increase the breadth of offering in high margin
Steriles and D&T
Grow and establish presence in Emerging
Markets
Establish foothold in the North American market
22
DELIVERING ON OUR STRATEGY
23
• Explore cross-selling opportunities
• Exploit our IP portfolio
• Investment in advanced technologies
• Product development partnerships
• Mitigation and improvement in Solids and Others
• Complete Alcon outsourcing
• Complete Nitin acquisition
• Further M&A activities with bolt-on acquisitions in Europe and
expansion into new geographies
24
Q&A
CONTACT INFORMATION
25
Thomas Eldered
CEO & Managing Director
08-602 52 10
Björn Westberg
CFO & EVP Finance, Control & Investor Relations
08-602 46 20, [email protected]
Top Related